Investor: “I’m glad I invested with you when I did.”
Me: “Yeah, why’s that?”
Investor: “Well, if I were still heavily invested in stocks and my 401k today, this week would have been very stressful because of the whole Russia-Ukraine situation.”
usatoday.com – “Wall Street Stocks Slide As All Eyes Shift On The Escalating Russia-Ukraine Crisis.”
Me: “News events have always triggered the stock market. It just seems to me that with the internet and social media and on-demand news, the markets have become more jittery more often. The markets have skidded on news of the COVID Delta variant, inflation, and the Omicron variant in just the past year. It doesn’t take much these days to shake the markets.”
washingtonpost.com – “Delta Variant Fears Send Dow Tumbling More Than 700 Points In The Worst One-Day Decline Of 2021.”
wsj.com – “Broad Selloff Signals Inflation Fears Are Warming.”
Reuters – “Stocks Slide On Inflation Concerns As Oil Prices Rise Further.”
globalnews.ca – “Stocks Slide As Omicron Variant Cases Surge Globally.”
Investor: “I’m glad I got into real estate when I did. I don’t fret about the headlines anymore. I know my investments are shielded from market triggers.”
Me: “Not only is real estate insulated from the typical market triggers, but it’s also one of the few assets right now that’s benefiting from inflation.”
marketwatch.com – “High Inflation Has Jacked Up The Cost Of Food, Gas, Cars, And Rent – And There’s Little Relief In Sight.”
The conversation above is one that I have weekly with one investor or another. They see what’s happening in the public markets and breathe a sigh of relief that they no longer have to deal with the madness of the crowds.
My conversations with investors this week have been dominated by Ukraine. The market slide from the Russia-Ukraine situation is nothing new. The truth is, the markets have always been triggered by geopolitical turmoil. In August of 1990, when Iraq’s Saddam Hussein invaded Kuwait, the S&P 500 fell 16% amid skyrocketing oil prices.
The liquid nature of the public markets is the reason for market susceptibility to the news cycle. The lightning speed of disseminating the news has made the markets more volatile and increased the frequency of market slides due to perceived market triggers. Some market triggers are worse than others, but there is no escaping them in the public markets.
Wise investors aren’t just seeking better returns; they’re seeking peace of mind amidst social, economic, and political storms. They want to make a capital infusion, step away for a few years and not worry about investment performance. They look at the track record of their asset and understand there may be temporary dips, but things typically iron themselves out over time.
By investing in the right assets in private markets that are not prone to knee-jerk herd reactions, smart investors can ignore market triggers. The headlines may matter from a human perspective, but they are largely unaffected financially. That’s why I run into investors all the time seeking an alternative to the Wall Street roller coaster, and it’s why I recommend commercial real estate (CRE).
What if you have a long-term investment window and seek an inflation and recession-insulated asset? In that case, few assets fit the bill like certain classes of CRE; affordable to mid-range multifamily for example.
Contact me today to find out how to invest and ignore all the noise and the market triggers.